Over a year ago DDIFO commissioned the American Association of Franchisees and Dealers (AAFD) to review and grade the Dunkin Brands franchise agreement.
The AAFD, thru a group of executives, entrepreneurs and attorneys has worked for over 15 years setting standards for franchise agreements to make them more fair and equitable. The ultimate goal is to make franchising work better for all parties by utilizing a spirit of communication and mediation to generate better relations and business results.
The AAFD set of standards are referred to as the “Fair Franchising Standards”. In the fall of 2008 DDIFO believed the existing franchise agreement was causing excess friction and litigation between Dunkin Brands and the franchisees. DDIFO believed this situation was caused, in part, by an inequitable franchise agreement and that the litigation had not been good for the Dunkin’ Donuts franchisee community. Personally, I believe the Fair Franchising Standards set a benchmark for a fair and equitable relationship that fosters collaboration and mediation among franchisors and franchisees.
Over 216 days ago, DDIFO sent a copy of the grading report to Will Kussell, who at that time was President of Dunkin Donuts, for Dunkin Brands. We posted a clock on the DDIFO.org home page tracking the time since the Brand had received the AAFD Grading Report, waiting for a response. Rather than making the grading public, DDIFO chose a more restrained approach keeping the grading a private matter between DDIFO and Dunkin Brands. Our goal: to stimulate a behind closed doors conversation about the inequities in the franchise agreement.
In the last couple of months there have been a lot of changes at Dunkin Brands. New leadership is in place including new Dunkin’ Brands new General Counsel Rich Emmett.
There is tremendous excitement in the franchise community for the changes and a renewed sense that a more collaborative relationship with franchisees is brewing at Dunkin Brands.
In that spirit of collaboration and improved relations, DDIFO has decided to remove the clock from our Web site and start fresh with the new management team. Today I am sending a copy of the AAFD grading report to Rich Emmet and I am making that grading report available to DDIFO members you can view it here.
DDIFO has committed money, time and resources toward research to enhance our ability to act as an effective watchdog for our members in the Dunkin’ Donuts franchise community. The AAFD is only one portion of the extensive research DDIFO has funded over the last 12 months. I am pleased to be able to share that report with you.
There are two parts to the AAFD Grading Report first is the Executive Summary, written by AAFD Chairman Robert Purvin. DDIFO members can view this summary at AAFD Executive Summary of DDFA.
Some of the key points in Mr. Purvin’s Executive Summary include:
• “Sadly, the Dunkin’ Donuts franchise agreement is among the most one-sided agreements we have reviewed and respects very few franchisee rights.”
• “The agreement’s overall score of about 54% conformity to the AAFD Standards is among the lowest grades recorded.”
• “The lack of territorial rights is most troubling. There is no territorial protection in the franchise agreement.”
• “The agreement affords no renewal rights.”
In his summation, Mr. Purvin says, “Many identified deficiencies could be solved with fairly modest adjustments, intended to protect the legitimate interests of both the franchisor and franchisee community. At the same time, the agreement has sections that fatally continue unfair and unacceptable practices that have too long caused franchise relationships to deteriorate. Many recommended changes would increase both the attractiveness of the investment, the sense of buy-in by franchisees, and the quality of the relationship between Dunkin’ Donuts and its franchisee community.”
The second part of the report is a detailed breakdown of each AAFD Fair Franchising Standard and how the Dunkin Brands franchise agreement stacks up. This is also available to DDIFO members and their attorneys by requesting thru email that I send you a copy of “Dunkin Brands Comparison to AAFD Standards”. Send your request for a copy to firstname.lastname@example.org.
DDIFO looks forward to a more collaborative relationship with Dunkin’ Brands where mediation and negotiation rather than litigation is used to settle conflict.
DDIFO is committed to making sure that the promise of today is fulfilled tomorrow.